Staking Luna

Staking Luna

What is Terra (LUNA)?

Terra is a public blockchain protocol for algorithmic stablecoins. It uses the Proof of Stake (PoS) algorithm. 

The price of any fiat currency is tracked by stablecoins created by the Terra protocol. These stablecoins can be easily spent, saved, traded, or exchanged on the Terra blockchain. 

Terra's native currency Luna’s main function is to keep stablecoins steady. Luna can be staked in exchange for rewards from transaction fees. Staked assets are used to validate transactions on the blockchain and absorb the volatility.

What is Proof of Stake?

Proof-of-stake (PoS) is an algorithm that uses a consensus mechanism for validating transactions on the blockchain. It determines who can validate the next block based on the election between validators. To become a validator you have to deposit a certain amount of coins into the network as a stake. A validator’s rank is then determined by the total amount of staked assets. Validators with larger stakes get chosen more often and earn substantially more in rewards. 

If someone wants to stop being a validator, his stake plus all the transaction fees that he got, can be released after a certain period of time. In Luna's case, the process of unstaking takes 21 days to complete. During this time assets can’t be transacted and they don’t even generate rewards. 

This process is much more energy-efficient than the proof-of-work mechanism as it doesn’t require large amounts of energy and hardware. 

How to stake Luna?

There are a few options for staking Luna assets. 


You can Stake Luna by becoming one of the 130 validators on the network that can participate in the consensus mechanism. They are responsible for securing the blockchain and ensuring its accuracy by running programs called full nodes. 

However, not everyone can become a validator on the Terra blockchain.   

The other option for staking Luna is by becoming a delegator. You automatically become the delegator by bonding Luna to a chosen validator through the Terra Station app. It’s an all-in-one platform for holding Terra assets. Staked Luna is never owned by a validator, however, it can’t be freely traded. Choosing the right validator is essential for Terra Station users, as they distinguish in several aspects: voting power, self-delegation, commission, and uptime. It's recommended to do some research and assess various staking providers taking into account these criteria. Validators are also keeping a portion of rewards as a commission. The rest goes to delegators based on their staked amounts.

What are staking rewards?

Luna staking rewards consist of Luna and also a variety of stablecoins in form of airdrops.

The current reward for delegating LUNA to a validator is around 6.95%. Validators and delegators get their rewards from 2 sources: swap fees and gas.

  • Gas = small fee that covers the cost of processing transactions
  • Swap fees = the fee for swapping Terra stablecoin and Luna

$ANC and $MIR airdrops are part of rewards available for free for Luna stakers. The size of airdrops depends on how much Luna you are staking on the Terra Station. If the amount of staked $LUNA is not very big, it’s common that the value of the airdrop is less than the transaction fee.

States of Luna

Luna exists in 3 different phases:

  • Unbonded = not staked and freely tradeable assets
  • Bonded = staked to a validator, generates rewards, can’t be traded freely
  • Unbonding = Luna that is in the process  of becoming unbonded from a validator, doesn’t earn rewards, unbonding period takes 21 days

Things to know before staking Luna

It is completely safe to delegate Luna because it is never owned by a validator.

Redelegating from one validator to another is in an instant and doesn’t have 21 days waiting period.

Your chosen Validator should have 100% uptime, or you will not be earning anything when it is offline.

How to get into Terra?

The easiest and the most popular option for using Luna is the Terra Station app. It is an official wallet for managing native Terra assets and tokens and connecting with decentralized applications running on the Terra blockchain.

How long does it take to stake Luna?

Staking Luna si very easy. It won’t take you more than 10 minutes to set up Terra Station Wallet and delegate your staking assets to your preferred validator.

How profitable is Luna staking?

Rewards for staking Luna are around 6.95%, although they distinguish according to the validator you have chosen delegate to.

How to stake Luna on pc?

Staking Luna on pc is pretty straightforward. You have to create an account on the Terra Station app and transfer Luna tokens to the wallet. You can choose between 130 validators on the network. Once you select a validator, it’s time to delegate your assets.

How to stake Luna on Android/IOS?

Staking Luna is also available on mobile devices. All you need is to install your Terra Station app, transfer your Luna tokens, go to the Staking tab, and choose between the different validators available.

Can I use my hardware wallet for staking Luna?

Yes, you can! Terra Station app can also be easily connected with hardware wallets such as Ledger. 

Are there any risks for staking Luna?

Keep in mind that there is a small fee for every single transaction.

The volatility of Luna might be a problem because withdrawing staked assets isn’t in an instant. The process of unstaking takes 21 days to complete. During this time assets can’t be transacted and they don’t generate rewards. 

Published: 03/11/2022
Staking Luna
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